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Advisor Outlook: Key market themes and risks

BlackRock’s Advisor Outlook provides financial professionals context on current market conditions, macro trends, and key investment topics across asset classes.

August Advisor Outlook

FAYE
I'm Faye Witherall, an investment strategist at Blackrock here with our Advisor Outlook update for August. There are three key anchors this month. First, equity leadership rotated dramatically in July. We saw a sharp selloff across the AI stack. Tech went from the market's biggest driver to its biggest drag. Importantly, that performance was not fundamentally driven. Second quarter earnings results have been extremely strong.

We've seen broad beats across industries, even against a higher bar. Forward guidance remains well above historical averages. So despite the price action volatility, underlying fundamentals remain encouraging.

And finally, the fed remains in focus. There has been heightened uncertainty around the Fed's trajectory as Chair Warsh limits forward guidance. We continue to monitor oil prices and risks to inflation, but expect the fed will remain on hold.

MAXINE
Thanks, Faye, for that market backdrop. I'm Maxine, and I'd like to share how advisors are positioning their portfolios at the total portfolio level. ETFs deliver nearly two thirds of exposure led by index ETFs, but the mix varies by asset class advisors. Lean, active, and more specialized areas, including diversifying alternatives, flexible bonds and plus fixed income sectors within equities. U.S. large cap fund growth and value lean index.

While emerging markets are even more index oriented, with 80% of exposure implemented through index strategies.

Finally, alternatives remain under penetrated, with only 39% of advisors holding them. However, among those who do, the average allocation is meaningful at 8.7% of the portfolio. These exposures also lean heavily active, reinforcing the preference for manager selection in more specialized strategies. Check out the full Advisor Outlook and Advisor Portfolio Insights for more of our best thinking, and reach out to your local market team, or call 877.

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Equity leadership rotates

Tech has moved from the market’s biggest tailwind to one of its biggest drags. Beneath the surface, AI remains powerful but increasingly volatile across the stack.

Strong Q2 earnings + guidance

So far, Q2 earnings have surprised to the upside even against a higher bar (tracking 24% YoY), and forward guidance has been stronger than usual.

Inflation continues to cool

Inflation data have improved, reflecting broad-based declines across the basket. Still, oil remains volatile amid geopolitical tension in the Middle East, and we continue to monitor.

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To obtain more information on the fund(s) including the Morningstar time period ratings and standardized average annual total returns as of the most recent calendar quarter and current month end, please click on the fund tile. Past performance is not indicative of future results. The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure (excluding any applicable sales charges) that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Explore advisor portfolio positioning in today’s markets

Advisor outlook Q326

The average monthly portfolio asset class breakdown is constructed by the underlying holdings classification. Source: Morningstar, BlackRock, Aladdin. “Advisor models” data is as of 06/30/2026, based on the 958 “moderate” risk cohort models collected by BlackRock in the 3 months ending 06/30/2026. Advisor models collected by BlackRock are grouped into 5 risk cohorts for analysis, based on total equity allocation. Models in the “moderate” risk cohort are defined as any portfolio with an overall equity allocation of between 50-65%. BlackRock’s risk model data is supplemented by asset allocation and fund characteristic data from Morningstar. The portfolios analyzed represent a subset of the industry, and not its entirety. As such, there may be certain biases present in the data that reflect the advisors who choose to work with BlackRock to analyze their portfolios.

Index strategies favored in U.S. large-cap & emerging-market equities

U.S. large-cap and emerging-market equity allocations have been predominantly index-based, while alternatives and flexible bond strategies leaned more active.

Equity portfolios tilted to smaller companies, value & select sectors

Advisor portfolios held more small and mid-cap stocks than BlackRock models and overweighted industrials, real estate, energy and utilities, while underweighting technology and communication services.

Alternatives have been growing but remain underused

Only 39% of advisor models held alternatives, although those that do allocated an average of 8.7%, with portfolios favoring gold and commodities.

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Frequently asked questions

  • BlackRock’s Advisor Portfolio Insights analyze ~1,000 real advisor portfolios every quarter, examining asset allocation, risk and costs. Explore polling insights, key trends and identify potential areas for portfolio review in the Advisor Portfolio Insights Deck.

  • The Advisor Outlook is a monthly market resource for advisors. Each edition includes a short video from BlackRock strategists, 2–3 key market takeaways, advisor positioning insights and curated investments ideas aligned to that month's themes. It is designed to help advisors understand current market conditions and risks and opportunities for their clients.

  • The Advisor Outlook is built specifically for advisors. It is different because it:

    • Updates monthly (vs. many quarterly outlooks)
    • Frames insights around client conversations
    • Connects themes to portfolio positioning and investment ideas
    • Is designed to be consumed in under 10 minutes

  • The Advisor Outlook is designed primarily for advisor preparation, not direct client use. For client-ready content, use Student of the Market (downloadable and customizable slides built for sharing) or Investment Directions (triannual PDF). Use Advisor Outlook to inform your client conversations and see how other advisors are positioning for today’s markets.